The death knell of an industry

It’s not often you witness so clearly the death knell of an entire industry or employment sector but that’s exactly what happened this week.

The events relate to Uber and the future of driving as a career.

I first experienced Uber last year when I wanted to arrange a cab to take me into central London. I didn’t want to use a black cab as I’m uneasy spending more on the journey than the film I’m going to watch. The alternative of a minicab was equally unattractive for quite different reasons.

Minicabs are famed for being unreliable in every way – turning up, getting to their destination, even in the quality of their interiors. I had lucked out when I lived in North London (before moving to Hoxton) in finding a firm with near 100% reliability but that is the exception to almost every other firm I have ever used.

“…I needed to go out so I called my local cab firm, ‘South London Liars'”
– comedian Jo Brand in one of her early standup shows

Instead I took the chance to try out the Uber app.

After an initial struggle to register my credit card on the website I downloaded the app onto my iPhone. On using the app I was impressed. This wasn’t just an app, they had transformed an entire industry.

They’d taken a service famed for providing a poor experience and with a layer of software and organised centralised infrastructure, made something radically better.

I open the app, it shows me where I am, and with one click I can summon a car. I can immediately see where my car is and how long it will be – usually just a few minutes. And I can watch the car drive along the map towards me. I can see the driver’s picture, name, and car registration.

Drivers are rated by passengers (and in fact passengers are rated by drivers). So the bad seeds should be weeded out. No one can run without paying because Uber has their credit card details.

It was an inspired person who looked at a minicab office and had a startup idea now valued at $50 billion.

I was reminded of Marc Andreessen’s comment:

“Software is eating the world” – Marc Andreessen

What about the drivers?

I was curious what the drivers thought of Uber so I asked a couple of them. They gave positive responses: they got more work without the usual gaps in paying passengers caused by driving back to base or to a busy part of town. And bad passengers were no longer the bane of their lives. One driver told me that in his pre-Uber days he had been threatened by a passenger and effectively kidnapped by being forced to drive out of town.

So it seems like everyone is winning – the passengers, the drivers, and of course Uber. But it quickly occurred to me that it might not stay that way. What happens when Uber dominates all minicabs? It seems unlikely rates for drivers will remain the same. What does the future really hold?

What’s next?

Uber have effectively commoditised human drivers (as tech startups often do with the people running their day to day service). The next step after commoditisation is often automation.

So it seems obvious that the moment a self-driving car is cheaper to buy and run than a manual car with a human driver, Uber will make the switch. That’s just good business sense.

And recently that thought was confirmed.

In the last couple of months Uber have been spotted testing cars in Pittsburgh, where they have opened up a development centre so it seems they’re already making plans.

At a panel last month, Uber board member Steve Jurvetson made passing reference to a comment from Uber CEO Travis Kalanick who said if Tesla made 500,000 autonomous cars by 2020, he’d buy them all.

And just the week before in a Tesla earnings call, Morgan Stanley analyst Adam Jonas asked CEO Elon Musk about a possible tie up with Uber:

Jonas asked Musk “is this a real business opportunity for Tesla, supplying cars for ride-sharing firms or does Tesla just cut out the middle man and sell on demand electric mobility services directly on its own platform?”

Musk then paused for a full six seconds of silence, before sheepishly responding,

“I don’t think I should, uh, answer it.”

Which of course suggests that Musk is considering one or other option. Elon is a strong proponent of driverless cars and has gone so far as to say, “people may outlaw driving cars because it’s too dangerous.”

Aside from Tesla, Google are also a very active player in autonomous vehicles and yesterday reports emerged that Apple have enquired about renting a private test track for their car project named Project Titan.

As Uber (already in 58 countries) and possibly others sweep across the world replacing the minicab industry, a switch to autonomous vehicles would have a big impact. And other driver-dependent businesses would be sure to follow suit. All this could be just a few years away.

Driving as a career is breathing its last breaths.

I wonder which careers and industries will be next? My interest as ever is in both the opportunities and the possible impact on the world of work so I will be fascinated to see what happens over the next few years.

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Uber is a revelation. Just like the Brits to stamp on a success story with their almost universal endorsement of the over priced protective Mafia style black cab operation.

johnsw

Yes I do love Uber as a user. I don’t think it would be right for the government to regulate to preserve the taxi system as it stands and so far they seem to be failing. But I do think we need protection for workers like minimum wage etc to prevent them getting abused by huge startups.